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Client Onboarding, KYC & FATCA Policy

This policy sets out how we onboard a new investor, what we verify before the first transaction is placed, and how we handle tax residency declarations. It applies to every investor serviced by PivotalFlow Financial.

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Purpose

This policy sets out how a new investor is onboarded by Nikhil Suresh Khatiwala (ARN-54387) and how Know Your Customer (KYC) checks are done. Its aim is to make sure that every investor is properly identified, that the requirements of the SEBI KYC framework, the Prevention of Money Laundering Act, 2002 (PMLA) and the AMFI Master Circular for Mutual Fund Distributors are met, and that no transaction is placed before the investor’s identity, risk profile and disclosures are on record.

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Scope

The policy applies to every new investor – individual, NRI, minor through guardian, HUF, company, partnership, LLP or trust – and to every existing investor whose KYC needs to be updated or re-validated. It covers onboarding done in person at the office and onboarding done online through the transaction platform.

Onboarding steps

1. Introduction and disclosure: We explain who we are, that we are an AMFI Registered Mutual Fund Distributor and not a SEBI-registered Investment Adviser, how we are paid (trail commission from the AMC, part of the scheme’s Base Expense Ratio), and that any scheme suggestion is incidental to distribution. The investor receives our Welcome Letter.

2. KYC status check: We check the investor’s KYC status on the KYC Registration Agency (KRA) portal using PAN. The status may show as KYC validated, KYC registered, on hold or rejected. Only a validated or registered KYC allows a transaction.

3. Fresh or modified KYC: If KYC is not done, or details have changed, KYC is completed through the KRA and the Central KYC Registry (CKYC). Documents collected: PAN, Aadhaar or another Officially Valid Document for address, a recent photograph, and for non-individuals the constitution documents, authorised signatory list and Ultimate Beneficial Owner (UBO) declaration. In-Person Verification (IPV) or video IPV is done and recorded where the route requires it.

4. PAN and Aadhaar: PAN is verified on the Income Tax portal and checked for PAN–Aadhaar linking. A folio is not opened without a valid PAN, except in the cases exempted by SEBI (for example, PAN-exempt investments up to the prescribed limit).

5. FATCA / CRS: The investor signs the FATCA/CRS self-certification giving country of tax residence and Tax Identification Number where applicable. Non-resident investors also give their overseas address and the type of bank account (NRE / NRO).

6. Bank account: The investor’s own bank account is registered for investments and redemptions. A cancelled cheque or bank statement is taken. Third-party payments are not accepted, except where SEBI permits (for example, a guardian paying for a minor).

7. Nomination: The investor either nominates up to the number of nominees allowed or signs the opt-out declaration, as required by SEBI. Joint holders choose the mode of operation.

8. Risk profile: The investor completes our Risk Profiling Questionnaire. The category is explained to the investor and recorded, and the Risk Profile Declaration, Risk Disclosure and Commission Disclosure are signed.

9. Platform registration: The investor is registered on the transaction platform with his or her own email and mobile number. The investor creates the login credentials. We never hold, ask for or store the investor’s password or OTP.

10. First transaction: A transaction is placed only on the investor’s own instruction, in the investor’s own folio, from the investor’s own bank account, and only in a scheme within the investor’s risk category (or with a written unsuitability confirmation). The AMC or its Registrar sends the confirmation directly to the investor.

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Special cases

•  Minor: the guardian’s KYC and relationship proof are taken; the date on which the minor attains majority is recorded so that the folio can be converted in time.

•  NRI: KYC with overseas address, FATCA/CRS, NRE/NRO bank details and repatriation status; investments are made under the FEMA rules for portfolio investment by non-residents.

•  Non-individual investors: certified constitution documents, board or partner resolution, list of authorised signatories and UBO declaration; investment intention and horizon recorded in place of a personal risk profile.

•  Politically Exposed Persons and high-risk investors: identified at onboarding and given enhanced due diligence as required under the PMLA rules.

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KYC Onboarding Process

KYC Process

RULES WE DO NOT BREAK

  • No transaction is placed for an investor whose Know Your Customer formalities are not complete.

  • No transaction is placed on an investor’s behalf without an instruction from that investor.

  • No cash is accepted, and no payment is accepted in the name of the firm or of any employee. Every payment is made in favour of the concerned Asset Management Company.

  • No signed blank form, cheque or transaction slip is accepted or retained.

  • A one time password, folio password, net banking credential or debit card detail is never sought from an investor.

  • The Employee Unique Identification Number of the person who canvassed the transaction is recorded on every application.
     

TAX RESIDENCY, RECORDS AND UPDATION

  • Every investor gives a self-certification of tax residency under FATCA and the Common Reporting Standard at onboarding. A fresh certification is obtained whenever a change in circumstances affects the declaration.

  • Where an investor is a non-resident, the applicable account type and the repatriation position are recorded on the folio.

  • Where the investor is a minor, the guardian’s Know Your Customer records are obtained and the date of majority is tracked so that the folio is regularised on time.

  • Records of identity, transactions and correspondence are preserved for the periods required by the Prevention of Money Laundering Act, 2002 and the rules made under it.

  • Changes in address, mobile number, e-mail address, bank account, tax status or nomination are given effect only through the Asset Management Company or the Registrar, on your authenticated instruction.

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RECORDS AND REVIEW

The KYC file (documents, IPV record, FATCA/CRS, nomination, bank proof), the risk profile and the signed disclosures are kept for every investor. Records are kept for at least five years after the relationship ends, as required under the PMLA rules, and are never shared for marketing. KYC is re-validated when the investor’s details change, when the KRA status changes, or when an AMC or Registrar asks for it.

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